Chaos or Corruption in Egypt?
Today’s “Spengler” column at Asia Times Online asks whether the generals are stealing Egypt. Applying Occam’s Razor to the welter of contradictory economic reports out of that unfortunate country, the simplest explanation is that the military leadership is complicit in looting what is left of the Egyptian economy. The dismissal of all the outside directors of Egypt’s central bank on Oct. 16 suggests that the Supreme Council of the Armed Forces doesn’t want witnesses.
An excerpt:
Egypt’s trade deficit last year rose to US$26 billion, with exports at $23 billion and imports at $49 billion, according to Mahmoud Abdul Hai, a consultant to Egypt’s National Planning Institute, the news site Youm7 reported on September 26. That would put Egypt’s trade deficit at a stunning 15% of gross domestic product (GDP). The central bank’s website, by contrast, reports that the deficit during the six months through July ran at an annual rate of 9% of GDP.
The central government probably has lost the capacity to count foreign trade flows accurately. A great deal of capital flight occurs through fraudulent invoices for imports as well as black-market exports of tradable commodities. The Egyptian press from time to time runs exposes of smugglers stealing rice, or fertilizer, or diesel fuel for sale to foreign buyers, although aggregates are hard to trace.
If Mahmoud Abdul Hai of the planning institute is correct, his country’s exports have fallen from to $23 billion from $29 billion in 2009. If true, part of the decline probably represents disguised capital flight.
Kleptocracy on this scale implies a social breakdown of Somalian proportions.
If so, where’s the money? Surely not in Egypt and surely not in Egyptian currency. One could look at recent currency trades and ferret out a clue. I assume Switzerland is not telling, nor the Caymans. They cannot be so stupid as to hide the cash in an Arabic bank.
Given circumstances, what the generals are doing seems like a rational plan for themselves. It’s every man for himself when a country goes down the toilet.
They figure that the party is over, there’s nothing much they can do about it, & so, it’s time to cash out.
Being from an Arab country myself originally, I completely understand.
When I was younger & there was a great deal of political instability, no rational person would keep money in the country. Everyone had a foreign bank account, mostly in France, many people bought appartments or villas overseas.
There was also the problem of inflation & a potential collapse of the currency.
Spengler:
As I have said before on previous threads, I care about this only to the extent that it affects Israel and the Jews.
And again, with Mubarak gone, keeping both the Islamonazis and secular Nasserite Nazis in check, (and yes, even the Copt Nazis), what really matters is that the desperation will turn into Jew-hating scapegoating (how can it not, when even this occurs on Wall Street — with the apparent blessing of the ADL, no less) and eventually a desire to turn this genocidal hatred outward into an attempt to exterminate Israel.
After all, if they are doomed to starvation and death, what will they care if they die by trying to finish the work of Hitler and exterminate all the Jews?
At least if they die that way, they believe that there are 72 mules awaiting them in heaven.
Eric, as long as the military is busy looting Egypt, there won’t be any war with Israel. And, the situation will not be mass starvation, Egypt isn’t N. Korea.
Terry,
You know better than I do that the primary goal of the Muslim Brotherhood is to exterminate Jews. And if that means starving Egyptians so that they are desperate enough to charge across the Sinai and die in a nuclear flash to serve as martyrs for the cause (they figure that if they send a million, perhaps 200,000 scarred survivors will carry on), they do not care.
The MB lives to destroy, not to create or build. And if Egyptians believe they face death, whether it be by starvation or by Israeli nukes, they will choose the latter if it gives them their virgins/mules.
Eric, while I’m sure the Muslim Brotherhood has wet dreams about killing us all, I think that right now, they are far more pre-occupied with what strategy to take within Egypt. I’m sure they worry about taking power since they will then be responsible for the deteriorating conditions in Egypt & I doubt if they want to openly confront the military at present. This is not to say that they won’t heat up the rhetoric or aid Hamas in terrorist attacks. But, a major war?
For sure, Hamas would like to pull Egypt into a conflict with Israel & you never know how a situation could escalate.
Absolutely right that that’s the direction of the sentiments, but I very much doubt that the Egyptian army is capable of strategize and implement a serious military campaign.
More likely is that the army will deteriorate, Islamist elements in the army will join with MB and Hamas in Gaza and will start a period of terror hits against Israel.
There is an old cliche that says arm chair generals talk strategy and tactics while real generals talk logistics. An army has to have a source of money for logistics. Can the Egyptian generals supply food and fuel for an effective military force given the speed with witch money is draining out of the country. How long could an Egyptian army last in the field without food, fuel, and water?
If the army spends itself against Israel does it think it can keep control of the Suez canal. They may end up with Chinese proxy forces running up their backs.
I could imagine, that there are still enough rich and anti-Semitic private foundations or individuals how would be happy to wire their donations from the mediocre successful Taliban to an Egyptian jihad. They would need to support only some hundred thousands and not 80 millions.
Indeed, that was my point too.
However, David has used the word “Somalian” and that’s the more real danger.
Anarchy in Egypt will induce infiltrations of all sorts ot elements whose purpose is to cause trouble, not the least of which are AQ and Iran.
FWIW. Egyptian armor is largely US built these days. A US armored division uses something like 1 million gallons per combat day (24 hr day) not counting the transport to get it to the tactical vehicles. US combat fuel consumption is a higher than others due to gas turbines in tanks.
Logistics is done in tons per day. ‘Beans, Bullets and Black Oil’ (fuel) was the old saw. Bullets are heavy, oil is large quantities, a soldier can go a couple of days with out food and about 12 hours without water, also heavy.
During the Viet Nam war, many were afraid that China would enter a la Korea. Knowledgeable people were aware that China did not have the transport needed to move and supply an army that far from their own borders.
So, Israel is surely looking at these details, at least one hopes they are. Israel has its nuts as well. The key for them may be Naval Forces and shipping. Ships deliver a lot of cargo for the buck plus force projection on both flanks of the Sinai. They can also be pre-positioned. That idea saved our tucus in Gulf I. Maybe some amphibious training would help.
Now back to the politics. One can only project chaos in Egypt. Too bad the Franco/UK Suez protection team cannot be rejoined. If a 10 mile wide band along the canal were in their hands some could breathe easier. Alas, we screwed the pooch on that one.
But chaos does offer opportunities. Islam remains the problem. In a failing state, with a populace known to be fond of conspiracy theories, a chance to offer an alternative Islamic narrative is apparent. It could even go viral. US is in a ‘stupid’ phase right now, but Israel…?
How about this?:
“CAIRO: Egypt’s economic situation should stabilize on the long-term, according to a trade forecast published last week by HSBC Bank.
The next 15 years will witness the rise of the Egyptian economy on the international scene, along with many other emerging countries such as India, China, Indonesia and Brazil, the report said.”
http://www.thedailynewsegypt.com/trade/hsbc-report-sees-bright-trade-future-for-egypt-as-deficit-narrows.html
Thanks for sharing. If you read the actual report, it’s pretty scary:
Doesn’t look like Egypt is going to make it to the long term.
David, very much enjoyed hearing you on Bloomberg radio this am.
Oh I’d love to see anti-Semitic private foundations or individuals send money to Egypt for military operations. Yes send them cash, send them that stuff hot off the printing presses. It doesn’t matter that the EU governments can’t generate enough wealth to save Greece, have exhausted their own military budgets on the Libyan operation, I’m sure those NGO’s can send enough to Egypt in time to support a major military operation. I’m sure all of the money sent would go for military operations….Remind me to buy some Swiss, French, Lichtenstein, Luxembourg, and Cayman Island bank stock if they send money to Egypt.
Which is why some of us discount the possibility of a military operation, but a failed state infiltrated by terrorism for which there is no authority to stop it.
I guess, the usual suspects with the money and anti-Semitic mindset are mostly in the Gulf states, so maybe you go better for Abu Dhabi or other financial centres.
Yes, Qatar has already granted Egypt 500million. There’ll be more from the Gulf and the West, but probably not enough to solve Egypt’s problems.
I think that there is a typo in the 14th paragraph of the original Asia Times article where David writes:
“… Saudi Arabia on October 16 said that it would buy $500 million worth of Egyptian Treasury bills and lend another $500 billion to tide the government over…”
I think you meant to write “…lend another $500 million” instead of billion.
Hag Sameach , Aaron
I agree with all you write about Egypt, except for “Kleptocracy on this scale implies a social breakdown of Somalian proportions”
Somalia never had social cohesiveness, unlike Egypt.
post-Soviet Russian kleptocracy comes to mind, except Egypt does not have Russia’s natural resources or a Putin waiting inthe wings.
I continue to think that only Libya can help Egypt, by re-employing one million Egyptians and also hiring the Egyptian military during the rebuilding of the eastern oil and water infrastructure.
Please keep us posted on whether Obama will force American wheat exports to Egypt, paid for by the GCC. Hope there will be enough surplus to also feed Yemen, because choosing between food anarchy in Yemen or Egypt – my sense is the GCC will save Yemen, and the US/NATO will occupy the Suez Canal/sea lanes,
and hope Egyptian chaos is self-contained.
Is Somalia a real threat to Israel or the House of Saud?
How many Egyptians will flood Europe?
I regret leaving in “to Israel”- it gives the wrong impression.
Many apologies for my impulsiveness.